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Hard Inquiries vs Soft Inquiries: How Do They Affect Credit Scores?

Read Time: 8 min

When interested parties evaluate your credit report, they typically perform a hard credit inquiry or soft credit inquiry. Whether they perform a hard or soft credit inquiry depends on the nature of the event prompting the credit inquiry. Hard credit inquiries are often performed when assessing an application for some form of credit, whereas soft credit inquiries are performed for credit preapproval or events unrelated to credit. But perhaps the most important difference to keep in mind is that these different credit inquiries have different impacts on your credit score.

Below examines the differences between hard credit inquiries and soft credit inquiries in more detail, including when, how, and why they’re performed, and some tips to avoid lowering your credit score!

What Are Credit Inquiries?

A credit inquiry occurs when an individual or institution inspects your credit report. This may happen when you apply for a loan, lease, or new job.

Wondering where your credit stands? According to Equifax, the average credit score in the United States is 698.[1]Equifax. “What Is the Average Credit Score by State?“. Accessed September 8, 2022. The credit scoring system implements a range of metrics to determine your “creditworthiness” through the eyes of credit reporting bureaus. While other factors play a role in your credit score, such as debt levels, missed payments, and revolving credit utilization, credit inquiries are one of the most widely known components of your credit file.

Do credit inquiries matter?

Yes. Credit inquiries matter because they appear on your credit report and directly shape your personal and business credit score. Because credit inquiries suggest you’re seeking some sort of funding, the more inquiries on your report, the lower your credit score.

What are credit inquiries used for?

graphic of a man in a suit pulling his credit score up after a soft credit inquiry

Let’s take a look at some popular events triggering credit inquiries:

  • Credit card applications
  • Loan applications
  • Lease applications
  • Mortgage applications
  • Job applications
  • Merchant account applications

Additionally, applications for various new accounts—such as a mobile phone line or utility service—may prompt a credit inquiry. A credit inquiry can also occur if you pull your credit file, so be mindful of the methods you employ to view your credit details.

What Is a Hard Inquiry?

Generally, a hard inquiry occurs each time you submit any sort of application to acquire credit. Because this type of inquiry indicates the pursuit of new financing, it can lower your credit score. Though hard credit pulls most significantly impact your credit score for an average of 12 months, they typically stay on your credit report for up to two years. That said, too many hard inquiries within two years can severely damage your credit file. What constitutes too many hard inquiries can vary among credit reporting bureaus, but it’s advised you avoid six or more hard credit pulls at any given time.

graphic icon of a green lightbulb to indicate examples of common hard inquiries

Examples of common hard inquiry events:

  • Personal loan application
  • Business loan application
  • Credit card application
  • Mortgage application
  • Auto loan application

How much does a hard inquiry affect your credit score?

A hard inquiry’s precise impact on your score is difficult to predict. As a rule of thumb, expect your credit score to decrease by five or fewer points due to a hard credit pull. However, your credit score may decrease more if multiple hard inquiries are performed in a short period of time.

What Is a Soft Inquiry?

Soft credit inquiries typically occur when you seek preapproval for credit, apply for a job, or otherwise check your credit file for reasons outside of obtaining more credit. Providing interested parties with only an overview of your credit file, soft credit inquiries do not damage your credit score.

How much will a soft inquiry affect your credit score?

Fortunately, a soft inquiry does not impact your credit score. This is because soft inquiries do not indicate you applied for credit, eliminating the financial risk associated with hard inquiries.

graphic icon of a blue lightbulb to indicate examples of common soft inquiries

Examples of common soft inquiry events:

  • Applying for a job
  • Applying for a lease
  • Obtaining preapproval for funding
  • Checking your credit score

Hard Inquiries vs. Soft Inquiries

To avoid needlessly damaging your credit score, understanding the difference between hard inquiries and soft inquiries is critical. Below explains the two fundamental differences between these inquiries:

  1. Purpose: A hard inquiry determines your eligibility for new credit, financing, or other fiscal arrangements. On the other hand, soft credit checks relate to non-financing events, such as applying for a job or checking your credit report.
  2. Impact on Your Credit File: Hard inquiries impact your credit score, but soft inquiries do not.

Examples of Hard vs. Soft Inquiries

A popular practice in the credit card industry is a prime example demonstrating the determining elements for a hard credit pull or soft credit pull. In the United States, many credit card issuers preapprove potential clients to entice them to apply. Preapproval requires only a soft credit check to determine a borrower’s creditworthiness. If the potential client formally applies for the credit card, a hard credit check must be performed before the application is approved and credit is issued.

Does Checking Your Own Credit Score Lower It?

Fortunately, checking your own credit score does not lower it. Before applying for a credit card, loan, or another form of financing, checking your credit score is advisable. Additionally, checking your credit score routinely helps you spot fraud, mistakes, and other issues impacting your credit score.

If you want to prevent other parties from checking your credit score, you can freeze your credit score. However, you may be asked to unlock your credit freeze upon submission of an application requiring an associated credit check.

Note: Only personal credit may be frozen. Business credit scores cannot be frozen.

graphic icon of a man wearing a tie checking his credit score on desktop computer

How to check your credit score without affecting it

When you check your credit score, a soft credit pull is performed. As stated above, soft credit inquiries should not impact your credit score.

Many financial institutions now offer consumers free credit checks. Additionally, the three major credit reporting bureaus—Experian, Equifax, and TransUnion—are legally required to provide consumers with a free credit report every 12 months.

Four Ways to Minimize the Effects of Hard Inquiries

graphic of two people sitting at a desk discussing ways to minimize the effects of hard credit inquiries
  1. Keep Your Credit in Order: To mitigate the impacts of hard inquiries, ensure other elements of your credit file are in good standing. Start by making on-time payments, minimizing your credit utilization, and checking your credit file routinely for signs of fraud.
  2. Opt for Soft Credit Inquiries: You can often obtain preapproval via a soft inquiry. In doing so, a lender can perform a soft inquiry to evaluate whether you’ll be approved for credit, rather than performing a hard inquiry only to reject your application.
  3. Dispute Improper Inquiries: If a hard inquiry is on your report by mistake, file a dispute with the appropriate credit bureaus. Eliminating incorrect items from your credit report can improve your score.
  4. Practice Patience: The longer you wait between hard inquiries, the lower their impact.

Note: For more guidance, check out our tips on how to build your business credit score.

How to Dispute or Remove the Effects of Credit Inquiries

If you find inaccurate credit inquiries on your credit report, you can remove them from your file to improve your score.

First, make sure the reason for the dispute is genuine. If you applied for a credit card, which resulted in a hard inquiry, you won’t be able to remove this credit check. However, if you did not consent to this credit check, you may still successfully remove it. This is also the case in the event of identity fraud.

To begin the dispute process, contact the party responsible for the hard inquiry and ask for the reason for the credit check. If you believe it’s fraudulent, communicate this to the responsible party. If the party does not communicate with you, supports a false claim, or otherwise refuses to remove the hard credit pull, contact the credit reporting bureaus. Each credit bureau has a dispute process through which you may submit complaints.

Hard Inquiries vs. Soft Inquiries: Final Thoughts

Now that you understand the differences between hard inquiries and soft inquiries, take advantage of this knowledge and reduce the impact of hard inquiries on your credit report. By opting for soft credit inquiries, especially for preapproval, you can maintain a good credit score and access the credit you need. If you’re an entrepreneur searching for business funding options, consider partnering with a merchant services provider. Your dedicated advisor can guide you towards soft inquiring options with no effect on your credit score, all while advocating for you to secure lower interest rates and better financing terms!

business owner sitting on mount of business funding and asking how long do hard inquiries last

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FAQs About Credit Inquiries

Do you have to give consent for others to check your credit score?

For an individual or organization to review your credit report, they must have a “permissible purpose,” including an application for financing, employment, or another applicable situation.

How long will the effect of a hard inquiry last?

Hard inquiries most impact your credit score during the 12 following months, but they remain on your credit report for 24 months.

How many inquiries are too many?

Because soft credit inquiries don’t impact your credit score, there is no such thing as “too many” soft credit inquiries. However, you should avoid having six or more hard credit inquiries on your account at any time. This can damage your score.

Why does checking your credit score lower it?

Depending on the method, checking your credit score can lower it. The more hard inquiries you have on your credit file, the more lenders may view you as a potential liability. Whenever possible, choose to check your credit report with soft inquiry services only, as they do not impact your credit score.

How should I prepare for a credit inquiry?

If you want to prepare for a credit inquiry, pay down your existing debt and review your credit file for mistakes. You can check for mistakes by requesting a free credit report from a credit reporting bureau.

If you start a credit card application online but don’t finish, will it count as a hard inquiry?

To ensure it assesses the correct credit file, a credit card company must obtain various personal information before performing an inquiry. If you do not submit an application, a credit card company will not have access to the personal information necessary to perform a hard credit inquiry.

If a hard inquiry is removed, how many points will my credit score increase?

This depends on how many hard inquiries you currently have, as well as the age of the removed inquiry from your report. Because a hard credit inquiry reportedly decreases your credit score by five or fewer points, you may expect your credit score to rise by five points or less if you remove a hard inquiry.

What can I do about inquiries that shouldn’t be on my credit report?

First, contact the party responsible for the inquiry. If the company insists the inquiry is correct, contact the appropriate credit reporting bureaus to file a dispute.

What information is on a soft pull credit report?

A soft credit report contains most of your core credit information, much like a hard credit report. The core difference between soft and hard credit inquiries is how they impact your credit score, not the information they provide.

Article Sources

  1. Equifax. “What Is the Average Credit Score by State?“. Accessed September 8, 2022.


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